Etridge defence—duress—fiduciary duty—estoppel

The defendant was a director and sole shareholder of a company which carried on business as a distributor of electrical supplies. On foot of a commercial finance agreement dated 16 July 2002, the claimant bank bought the company’s commercial debts at 80 per cent of their book value. On the same date, the company provided the bank with a “fixed equitable charge” over the debts purchased by the bank and future debts. On 5 November 2008, the defendant entered into a guarantee and indemnity of a £200,000 term loan provided to the company to settle outstanding foreign exchange contracts recently cancelled. In 2010, the bank issued proceedings to recover payment of the liability of the defendant under the guarantee.

The company went into liquidation in June 2009. In September 2013, the defendant, without the consent of the liquidator, caused the company to issue proceedings against the bank for breach of statutory duty, breach of contract, negligence, negligent misstatement, fraud and misrepresentation. The liquidator subsequently assigned these proceedings to the defendant. The defendant’s underlying complaint was his allegation that at the time the company entered liquidation there was some £2.3 million of “good book debt”, which, had it been set off against £1.8 million of liability to the bank, would have left a £500,000 surplus and no indebtedness to the bank.

Some unsatisfactory and potentially suspicious circumstances of this case were commented upon by the courts. First, the case was “disturbingly elderly” (McCloskey LJ [2024] NICA 80, [1]). Secondly, a BBCNI Spotlight investigation broadcast in November 2015 appeared to show bank employees on company premises behaving in a manner counsel for the bank admitted was despicable. Thirdly, the bank’s application to strike out parts of the defendant’s defence (the subject matter of these proceedings) only came after an application by the defendant for further discovery.

Master Bell struck out large parts of the defendant’s defence as “obviously and almost uncontestably bad”. Simpson J reinstated some parts of the defence that the Master struck out and his decision was affirmed by the Court of Appeal. The Etridge defence (that the